New Delhi: The efficacy of genetically modified Bt cotton in resisting pest attacks has declined over the years, the central government told the Delhi high court. As a result, royalties charged by a technology giant like Monsanto must also come down, it argued.

The government’s response came in a dispute over an order to regulate cotton seed prices and fix royalties. The order is being challenged by Mahyco Monsanto Biotech India Pvt. Ltd (MMBL), a joint venture between Mahyco and Monsanto.

The company petitioned the high court to quash certain provisions in the price control order, specifically those allowing the centre to determine trait or royalty fees.

“Pink bollworm, a major pest to the cotton crop, has already developed resistance in the last 2-3 years; farmers are a worried lot having sown Bt cotton seeds purchased at high price,” the government said in an affidavit.

It added, “The crop is getting damaged due to pink bollworm incidence. It is a natural phenomenon that over the years efficacy of the technology goes down, hence the royalty on technology should also be reduced.”

The centre’s affidavit, filed on 23 January, added that Bt cotton seeds are now unaffordable to farmers due to high royalties charged by MMBL which has a near monopoly on Bt cotton seeds and that this has led to a market failure.

“The regulation of Bt cotton seed prices under such situation cannot be meaningful if the trait value or licence fee or royalty is not regulated,” it added.

Around 8 million farmers grow cotton in India and Bt cotton technology supplied by MMBL makes up over 90% of the seed market.

The case arises from a price control order issued by the agriculture ministry on 7 December 2015 to make Bt cotton seed prices affordable to farmers and bring uniformity in prices.

MMBL, which licences its patented Bollgard II technology to 49 seed companies in India, said in its petition that the price control order is “illegal and unconstitutional”.

An MMBL spokesperson said the “court has permitted MMBL to file its response to the Union of India’s counter affidavit. The matter being sub judice, it would be improper to comment at this point of time”.

The Delhi high court on Wednesday said the case will be heard next on 4 March.

The government argues that its power to pass orders under the Essential Commodities Act (1955) overrides existing laws, including the Patents Act 1970. This, the government said, justifies its move to regulate royalty fees charged by patent holders like MMBL.

MMBL charges trait fees of Rs.163 and Rs.175 for Bt cotton seed packets (450 grams) that are sold to farmers (by different seed companies) at Rs.930 and Rs.1100, respectively.

On Wednesday, the agriculture ministry constituted a price control committee that will recommend the maximum sale price of Bt cotton, including royalty fees paid by seed companies to technology providers like MMBL.

The committee, according to the government order reviewed by Mint, will also suggest the format of all licensing agreements for genetically modified technology.

In support of the government’s price control order, executive director of industry lobby group National Seeds Association of India (NSAI), Kalyan Goswami said that the central order was a good move that will help all stakeholders including farmers.

“The balanced regulation might leave enough margins for the seed companies to invest in R&D and infrastructure development compared to the situation till 2015 wherein some of the cotton seed companies have even become bankrupt,” he said.

Goswami also called for reforms in the intellectual property regime for essential commodities like cotton seed.

“NSAI...believes that all GM traits and the IPR (intellectual property rights) related to them must be declared as standard essential patents (SEP) and only if the technology proponents accept this kind of governance, new GM traits may be approved in our country,” he added.

A patent is declared an SEP when the technology becomes the industry standard (like in smart phones).